IMF not needed; Lefties shackle Cyril; Goldfields, Implats back in black; Discovery recovery; Petrol price hike

By Linda van Tilburg

  • The International Monetary Fund says South Africa has not asked for its assistance and the country does not need help. The IMF representative in South Africa, Montfort Mlachila says the IMF does not see any balance-of-payment problems in South Africa. Mlachila said the institution much prefer countries to resolve their own problems and South Africa has the capacity to do that on the growth and fiscal front. He however said structural reforms can help boost growth such as the allocation of broadband spectrum, a simplified visa process, increased competition in productive and service markets, more labour-market flexibility and more efficient state owned enterprises.
  • President Cyril Ramaphosa’s dependence on the left is hampering reforms in South Africa, that is according to Bloomberg, who reported that the same labour movement that he had built up for four decades ago was standing in the way of reforms needed to revive the economy. The president’s labour backers are opposed to job cuts needed to help rescue power utility Eskom and to trim the government’s bloated wage bill. Bloomberg quotes Stellenbosch politics lecturer Ntsikelelo Breakfast, who said it was difficult to please market forces while Ramaphosa has these allies, “they are the people holding him back.”
  • Gold Fields has returned to a first-half profit of $70.5m in June after a loss in the previous half Gold Fields maintained its output guidance of 2.13 million ounces to 2.18 million ounces for the full year. The company has also announced plans to extend the life of operations at its jointly-held Asanko Gold mine by eight years to ten years as it bolsters its position in Ghana and says it is considering a new mine in Chile. Headline earnings per share however fell sending its share prices down by 9.76% on the JSE but the year’s gain has been more than 70%.
  • Implats has swung to its first net profit in five years benefitting from higher metal prices and operational improvements. Implats is expected to report basic earnings per share of between R1.81 and R2.30 for the year through June. Analysts say the return to profit is likely to bolster the case for a resumption of dividend pay-outs, especially after the company has reduced its debt following a debt swap. Platinum producers have received a boost from surging palladium and rhodium prices and a weaker rand. The outlook however still has risks as the industry is in talks with unions over a three year wage deal. Implats’ share price dropped by 2.5% on the JSE.
  • Discovery shares recovered somewhat yesterday after shares were hit by the announcement of the government’s plans to forge ahead with the National Health Insurance. Discovery shares rose by 5.26%. The Rand pulled back from its slide after a low of R15.47 yesterday, the rand was trading at R15.27 to the dollar at end of the trading day after it tested the R15.20 mark twice.
  • The Automobile Association the sudden rand weakness could mean that the price of petrol could increase by as much as 10 cents a litre in September and a rise of 12 cents a litre for illuminating paraffin and 16 cents for diesel. This is even though international oil prices have dropped markedly. The AA says the rand has left South Africa to the mercy of international oil markets which has turned a likely fuel price reduction into an across-the-board increase. This is after the retail price of petrol increased by 11 cents a litre in August.
  • National departments owe service providers R600 million in behind payments. That was revealed by the Minister of Small Business Development Khumbudzo Ntshavheni in Parliament. The departments guilty of late payments are the Department of Water and Sanitation; Agriculture, Forestry and Fisheries and the South African Police Service. The government has been criticised for putting strain on small and medium enterprises for the late payment for goods and services, while they claim that these enterprises are important to the economy.